With paypal to become an independent company next year. By a had faced pressure from carl icahn and others who urged them to split their marketplaces and payment business. With this move, donahoe will leave once it is complete. American express executive dan shulman is c. E. O. Designate of the new palpal company. Is it a good idea . I have been asking various members of the paypal mafia that question. These are the paypal founders who sold the company to ebay in 2002. Here are some of their opinions. There are still a lot of synergies between ebay and paypal. Him and no matter what happens, whether they spin it out or keep it in, there has to be a Firm Commercial agreement. I think that is a priority. Will paypal grow faster if it were not within ebay . Maybe, maybe not. Would it be valued differently by the market or have a better multiple all that stuff . I dont really care. If it spun out and had its own stock, you could motivate the Management Team to do more direct they would be compensated purely on palpays performance. Spinning out is not a terrible idea. The relationship to ebay has to be extremely strong. Should paypal be spun off from ebay . I think there are very large synergies between paypal and ebay. Maybe something that ebay should consider at some point in the future. But i think ebay was right to resist carl ikahn. We dont want him to be dictating to us. If it was spun off, who should be c. E. O. . It is critical to have someone with a product sense and not someone running it as a business. Someone from the paypal mafia . I dont want to name any names, but there are people there that would be good. You had a sale to ebay for 1. 5 billion in 2002. Looking back, was it the right decision . Ebay, paypal have had an interesting year. Some other members of the paypal mafia think they are better apart. It was the right decision at the time. We made it collaboratively. Part of the reason was to really get to the right level of the payment transaction system, it required a much closer connection with ebay. There is all kinds of synergies between the ebay business and paypal business. The funding mix comes from people who already have balances. Now you can say look, is it better inside or outside . One can make good arguments both ways. It is a question of what is the Management Team and what do you build toward . I dont think there is any way that longterm Companies Stay together. The economics and the logic are breaking them apart. There is a reason why paypal has missed every window. The stripes, the squares. It is going to continue to miss as long as it is a subsidiary of ebay in san jose. An if you poll the Leadership Team, 90 believe in spinning off the company. To me, this is not a question of if, but when. In the sense that if the trend lines keep going the way they are going, ebay transactions will eventually be a single digit percentage of paypal volume. I think it could be a 100 billion plus financial powerhouse. Im joined on the phone by the paypal cofounder in new york. Also a former paypal senior executive. Now that it is official, what do you think . What is your reaction on this incredible reversal from ebay . I am not sure it is incredible. In an from the clips you just and played, most of us believe a in one form or another a general feeling to get paypal its own wings and most importantly to give the Management Team direct and correlated compensation to the performance. I am glad john is the one calling the shots. That preserves their you relationship with ebay. And david is worried about single digit percentage volume. You and that rings true. But losing that incredible volume would be a bad thing. And i think on the incredible news it seems great that john is willing to pull the trigger. In remains to be seen whether will you and the Management Team you the Management Team around the new paypal will be able to realize the full potential but very hopeful it well. Will you what do you think of and you the American Express and executive now in charge . I know i have spoken to many of you guys over the last few months. You and some of you wanted a former paypal mafia member to be you ceo and indeed that is not will ceo and indeed that is not the case now. And i have no working past you and with him. I have seen as bio but have no youi have seen as bio but have no are working past with him in you will selling with him, so i am the least likely person to comment. He checks all the box in terms andhe checks all the box in terms of having been inside. It is his opportunity to lose. Youit is his opportunity to lose. Obviously, it was a romantic and you and notion to see one of our own at the helm. You your thoughts . Are i think it was a i think it was inevitable. You this was going to happen. As you might know we predicted and you when we sold a Company Paypal will be larger than ebay. There were only two executives at ebay at the time who believed that. And you almost certainly paypal will will trade at a higher market cap than ebay. Also in terms the technology developments, which you have been critical of, what has paypal missed and what risk does a separate paypal have now been might not have been edited when people were looking at the whole package earlier . Paypal has missed the last decade in the United States. The growth has been fantastic. There has been a lot of International Growth and have been very successful outside the United States. The United States there has been an incredible innovation in payments over the past decade and paypal has not participated in any of it. Whether it is square or stripe, bitcoin and the derivative consequences. Paypal has been irrelevant in all of those conversations. Basically the past decade it has been a big black hole. The product is worse in the United States that was 10 years ago. How do you respond to that . Has paypal missed that much innovation over the last decade . I think in part it is sitting on top of an automatically growing revenue stream user base. Quarter to quarter you are seeing 15 growth in the worse times. That is understandable if not forgivable. The flipside of paypal, it was founded over a decade ago and there are still a lot of the same code base that is powering transactions underneath. It becomes more and more scary to rewrite. To gut it, change it. Even spinning it out will not necessarily solve that problem. They will still be under the quarterly magnifying glass of the public investor. I think it is inevitable that the Management Team will take relatively aggressive steps towards making it more flexible and offering new products and services. In this opportunity and Small Business lending. People or companies that see cash flow and transactional volume of a Small Business inevitably get into the cash flow management. It is an enormous opportunity. John donahoe has told me that he personally came to you and other members of the paypal mafia for advice for what he should do. What can you tell us about what kind of conversations happened behind the scenes between you and other members of the paypal mafia and ebay . I think he probably in part thinks it is private. I am trying to remember exactly what i told him. To some extent the current Management Team within paypal, all of us are in agreement that it has a tremendous amount of potential still, there are massive payments lending and consumer services. Just massive inefficiencies in payments, lending, consumer services. I am not too worried about paypal being in the same state. Just such a big market. I think were all pretty happy that this is happening. Were hopeful. You have been nodding vigorously. I agree with all of that. That it is has been the big challenge and opportunity in front of the Management Team. They talked about the way that ebay helps paypal talking about the working capital and the Balance Sheet of ebay giving a lot of potential capital. How much money does paypal need to have on the side or in terms of working capital and can they do that as a separate Company Unless they have a very big Public Offering . It is going to be a 50 billion public company. Financial Services Innovation is expected. It is definitely not something the firm surely will raise money as well. It is not something you can do on a 100,000 lean budget. Paypal should have plenty of resources. That is something that ebay helps with as they expanded internationally. Well have more coming up next and be joined by another member of the paypal mafia. Stay with us. Welcome back to the best of bloomberg west. Im emily chang. Back to the future of ebay and paypal. Our editor at large, cory johnson, keith and i were joined on the phone by another member of the paypal mafia. I asked sacks what his reaction was to the news. I was surprised about this announcement. I talked on your show about how i thought the spin out was a mathematical inevitability, that is the percentage of payments on paypal as the ebay volume went down that the spin out would make more and more sense. I give ebay a ton of credit for being ahead of the curve with this decision now. What do you think happened behind the scenes . This is a big reversal. We had the ceo in our office talking about why he decided not to do this not too long ago. I think as the board looked at this they probably felt this was a matter of when not if. Once you come to that conclusion, it makes sense to act decisively. I really applaud their decision. I think it is a very selfless move by john donahoe. I will give him credit for that. David, in terms of credit, we were talking of the Technological Prowess or lack thereof from paypal today. How strong is the technology of paypal . The Growth Numbers are impressive. You know, one of the other big trends the last 10 years is the shift toward the developer. So i think, you know, i think there is opportunities there to update the system. This product that we really created in early 2,000. I think there is an opportunity to update the product and make it more social and mobile. You have seen some of that in the acquisition of a product by paypal. I think they mad a great acquisition with braintree. You said it would be a 100 billion business on its own. What do you think now . To be clear, i wasnt prognosticating on what it would be if it was spun out. At the time i said that, i didnt know it would be spun out. I guess i was saying there was a pathway. If it was an independent Company Creating one of the largest internet companies. I still think that is approved. I think that obviously payments paypal is the leader. If they make the right moves over the next five years, it could be a very, very significant company. Keith, ill give you the last word here. Challenges ahead for paypal as an independent company. I think that, you know, obviously the world is moving very fast. Johns statement was transparent. It has evolved quickly. The innovation has been incredible. David sacks, keith rabois with cory johnson and i. New oracle coceo. He will have big shoes to fill as he succeeds larry ellison. What are his plans for this Software Giant . We hear from him next. Welcome back to the best of bloomberg west. Im emily chang. Oracles coceos are laying out their vision for the company. Cory johnson caught up with hurd at oracles conference and asked how different is oracle now that ellison is no longer the man at the top . It probably isnt a lot different. Better technology. We have been working together a long time. Youll see a lot of that here at this conference. Our job is to focus on execution. We have a real exciting few years ahead of us. We just have to get our work done. There has been a lot of criticism of the notion of a dual c. E. O. You have seen that not work out. How do you make that work . We got the same comments when we had dual president s. You should think of oracle more as a team. We have a great team, people that run our regions. We have 134,000 people at oracle now. A big company. We spend 5 billion on r d. We have a need for great leadership. It is really a team sport. When youre talking to customers now, what is the story this year . Why is this year different . You have to have a theme you have 60,000 people here. What do you want them to walk away with . I think it may be over that 60,000 people. That is a lot of people. All i know is i got into two restaurants this week. Im shocked you could pull that off. You must know somebody. I lost a lot of weight and can slip in. Most i. T. Budgets are not up. Most budgets are flat or slightly down. They are being asked to save money and to innovate. How do i get to a new set of buyers and employees who have tools like you have in your hand . They want to work. They want to buy. They want to do things the way they have done them in their lives and they have to inovate. Most of them, their applications to run their companies on average are 20 years old. Average application if this country is about 20 years old. So they were built preinternet. Half of all of the software in companies is customwritten. They are not flexible or easy to upgrade. Thats why you have heard a lot about the cloud. It is the promise of more flexible, easy applications that are not customized. That are extendable. Larry did a great job showing you could customize an application without changing base code. How you could move it from on premise to the cloud and back. This will revolutionize how customers think about applications. Does that offer an opportunity for you guys to go in and replace those custom apps with things that can be tweaked . We have 132 new applications. Our strategy is to be the best at what it does yet at the same time, we have a suite of applications so we can do a lot of the work for the customers. At the same time, to release platform capabilities, in the cloud, that now allows those customers to extend those applications without customizing them and making them so unique that they cant be upgraded. You are going from this tremendous shift from licensed software. I worked for a that used to say that you can change the fan belt while the engine is running but it is no not preferable. That seems like thats what youre doing with your Business Model now. I dont know about the fan belt thing. In the context of our business, and the quarter we just reported, we grew our sas revenue 32 and had that defied percent bookings which is good news because that means a revenue will grow larger in the future. And yet we still grow our own on Premise Software business which grew 5 . We are growing a lot in the cloud and with the announcement we made of the show, we will grow even faster as we go forward. I talked about the new stuff you are offering and guys i talked to were really impressed. With the offerings and things competitors have to answer to these new products. There are three levels to the cloud. There is what is called platform as surface, and infrastructure as a surface. And sas which is applications. Our strategy is to be highly differentiated. Applications is a service. That is where we want to have best of breed at each application. People are actually using that application . There are over 60 million unique users using oracle applications in the cloud today. Those could be hr apps, sales, marketing. In the cloud each one needs to be bestofbreed but a family of applications that can work together. Second, theres a thing called platform for service which is the opportunity to get java and database as a service allowing for customers to build applications or extension to applications for cloud tools. This is very different because 30 of all it spending and Corporate America or in the world is development and test. Us of that is done on premise. They have to buy a server and license fees. You can now go to the oracle cloud get the most popular programming language in the world and the most popular database in the world and have access to those tools and do it straight off those tools with no computers and no assets to be bought. Mark hurd and cory johnson. Coming up, the Technology Behind stopping the spread of the ebola virus. From airport screenings to using satellites to track it, we look into some of the tech tools that Health Professionals are using. Youre watching bloomberg west where we focus on technology and the future of business. Im emily chang. The first ebola case in United States was recently diagnosed in texas. The patient passed to the u. S. From liberia. How can officials use technology to try and stop the spread of ebola . I spoke with Patrick Tucker and started by asking whether anything can be done at airports to keep someone with ebola from get on a plane . At this point in time, not a great deal at all. Some airports like in south africa and nigeria and asia are experimenting with thermal scanners. They scanned for elevated human temperature. They were in place across the United States as well following the 2009 sars outbreak which was feverbased. The problem with that is while it provides a certain amount of public comfort, but it is not going to be an effective stop. You can carry ebola for as long as 21 days before you begin to present symptoms. When you start to present symptoms is when you run the risk of passing it to others. The scanners are not going to catch ebola that is in people who have not yet presented. It is cosmetic and thats the only effective means we have right now aside from taking a blood sample. In nigeria, if you present with elevated fever and if they have suspicion that you might be an ebola carrier, they pull you aside and do a blood test on you and that takes about two hours. That seems to work ok in nigeria but its completely impractical in a place like dallas or atlanta or perhaps even brussels. That is not being done